Clawback Prevention and Cash Flow Management for New Brokers

Clawbacks are the bane of any broker business, particularly when you're new to the industry. So what systems and processes can you put in place to prevent them from occurring — and, at the same time, increase customer retention?

There's already a lot going on in the first year:

• learning lender policy,
• learning the systems,
• getting deals structured and settled,
• trying to generate enough leads to keep the pipeline moving.

It would be easy to treat everything after settlement as done.

The loan's written, move on to the next one. But a settlement isn't actually the end of the workflow. The client settled in the loan book today is part of what determines next year's income, not just this month's.

A settlement isn't the same thing as cash flow

A broker can have a strong month for settlements and still have a difficult month financially. That's because income doesn't move in a straight line with this month's work — a chunk of what lands (or doesn't) is determined by what happens with clients from months or just a year ago.

Every brokerage is really running two things at once: bringing new business in, and protecting the back book that's already been built. Watching only the first one misses half of what's actually driving the numbers.

What happens after settlement matters

The clawback mechanics are simple enough to look up: most lenders claw back 100% of upfront commission within 12 months, 50% between 12 and 24 months, and nothing beyond two years under current regulation, per the MFAA's guide to how brokers are remunerated. But knowing the rules doesn't actually prevent a clawback. The more useful question isn't "what are the rules" — it's "why did this client leave in the first place?"

That's not always about the loan.

Sometimes circumstances genuinely changed. Sometimes the loan wasn't the right structure for where the client was headed. But often it's simpler than that:

The client hasn't heard from their broker since settlement, another broker reached out at the right moment…

Or the client didn't know their original broker could still help them.

Those aren't loan problems. They're relationship and workflow problems — and they're the ones a broker actually has some control over.

The work doesn't stop when the loan settles

In our podChat with Ruth from Stryd, she mentioned that when she worked in a broker company, post-settlement work was treated like an RCTI each month — an admin task rather than a growth lever.

New to the industry? RCTI stands for Recipient-Created Tax Invoice — the document an aggregator issues on a broker's behalf to record commission owed, since brokers don't invoice lenders directly.

For a lot of brokers, checking that RCTI is still the only regular touchpoint they have with their own settled loan book. A compliance and payment confirmation, not a retention one.

That gap is part of what led Ruth to building Stryd: a platform that lets brokers track every settled deal against current rate, current balance, and current LTV compared with live market data, surfacing which clients actually have a reason to move before they've acted on it.

Standard aggregator software doesn't typically surface those three data points at all, which means a broker would need to manually review loan by loan.

Your existing loan book already has the answers in it

Vishal from Property Dollar, ran several tests with his team across broker groups before building their retention tool, Connect 360. Through that process they discovered close to 46-47% of a broker's existing loan book already has some kind of opportunity or risk sitting in it — not because nothing's happening, but because nobody's looking at their back book.

Vishal's understanding on why the relationship tends to drift after settlement in the first place is “No one gets up in the morning and decides they need to borrow $1.5 million — the loan was always a means to an end, never the relationship itself. Once it settles, the client's next app download is usually their bank's, not their broker's, unless something actively holds that relationship in place.”

Your loan book is an investment asset, not a series of closed files

Like a property investment, a loan book needs ongoing maintenance and review to protect its value and the future income it generates.

A person doesn't buy a property, settle it, and forget about it if they want it to keep producing value — the same applies to your Broker operations.

When a client is treated as a completed transaction and stops being watched the moment the settlement file is closed, they become a higher risk of Clawback. Whereas a client that is treated as an asset being actively managed stays in view, becomes a lifelong partnership that has the opportunity to expand and grow.

How to prevent clawbacks and manage cashflow in your broker business

Add in systems and process to remind yourself to review your back book.

This can be as simple as adding a ‘Settled’ pipeline to your CRM. Then setting stages for 14 days, 60 days, 6 months and yearly check-ins.

The key is to make sure within the first 14 days, they have everything they need setup correctly especially if they have an offset account.

Another popular habit is logging Birthday reminders. But don’t be “typical” in this message system because a text on a birthday with a special offer reads as spam.

Do something that is one week before or a few days after - so they know you know it’s their birthday.

Gifts aren’t always required, thoughtfulness is.

Add this to your SOPs

Before settlement

• Make sure the client understands what happens after settlement, not just up to it
• Capture the client's broader goals and future plans, not just the immediate loan need [log tid bits of interest e.g. likes water sports, travel, has a brother looking to launch a business - new opportunities are hidden in these off hand comments]
• Set yourself reminders for the follow ups

After settlement

• Check in within 14 days
• Track rate, balance and LTV against live market data, on a regular cadence [or use a service like Stryd or Connect360 to keep on top of this for you.]
• Conduct genuine periodic reviews, not just ann annual check-in
• Give clients a clear, known way to reach out when circumstances change
• Maintain reasonable contact or communication e.g. add them to a monthly newsletter

Frequently asked questions

What is clawback and how long does it last?

A lender reclaiming some or all of the upfront commission if a client refinances or discharges a loan early — typically 100% within 12 months, 50% between 12-24 months, and prohibited beyond two years under current regulation (per the MFAA).

Can a broker charge a client for a clawback?

No — not since the Royal Commission reforms.

Is retention just an admin task?

It's historically been treated that way, but the more accurate framing is that proactive retention is a revenue function. It has the opportunity to expand into referrals and client life expansion top ups.

What's the highest-leverage thing a new broker can do to reduce clawback risk?

Track a small number of real signals against the existing loan book on a regular schedule via your CRM, rather than relying on memory or waiting for the client to make contact first.

What about Sherlok for Rate Monitoring?

At the time of this publication Sherlok are not onboarding new brokers. However you are welcome to join their waitlist.